Opening The New York Times on Friday morning, I blinked. The headline on its lead story, spread over two columns, blared out, "Obama's Economic View Is Rejected on World Stage." Whether or not you like this president, the headline should make every American wince. Yes, other presidents have experienced setbacks, but it has been a long time since any of them has been so publicly rebuffed in a gathering of the world's major nations. Indeed, since World War II, our presidents have dominated the world's economic decision-making.

There is a suggestion coming from the White House that the press is being unduly dramatic in its reporting on these setbacks. But is this believable about The New York Times? Hardly.
No, what we have here is something more serious: not only a president who is personally weakened by elections at home but a proud nation that is also weakened in the eyes of the world.
For too long, the U.S. has been seen by a growing number of other nations as acting recklessly with our finances. Within less than a generation, we have fallen from being the world's biggest creditor to the world's biggest debtor. Fingers are also pointed at us for causing the Great Recession.

I do wonder what it would be like if the US has a second rate economy and we're a mediocre country, not a superpower.

What it would be like? Hasn't this, at least arguably, already happened? The US still has the best universities (but only for the gifted and comparatively priviledged), it still has Silicon Valley and Wall Street, but it also has second rate medical care (only the 37th best in the world, IIRC?) and a second rate transport system.

It is simply a matter of re-adjusting to the new reality. Losing global economic powerhouse status does not necessarily mean that the US becomes poorer in absolute terms, just relatively so.

Back in 2007/2008, economists were debating whether there would be a rebalancing of global hegemony as a result of the credit crisis in the Anglosphere. I think we have our answer now.

My main fear is for a new era of protectionism which would make everyone poorer.

Let us also remind ourselves that the country that was the economic powerhouse of the 1980s has been mired in recession or at best sclerotic growth for the last twenty years, and apparently if you bought an apartment in the CBD of its capital city in 1989, you still wouldn't get what you paid for it if you sold today. (I'm talking about Japan.)

One thing where the US still has an edge is the culture of innovation and entrepreneurship in Silicon Valley. That is your single greatest asset, as a nation.